Outsourced catering and consultancy

The company had two distinct activities. The operation of catering concessions at country parks, garden centres and other establishments, and a consultancy business involved in the design of kitchens and catering facilities.

Trading difficulties were encountered during 2005 following the unexpected loss of a key customer in the design business and various unforeseen operational difficulties at the catering concessions.

As a result, its bankers instructed a large national firm of accountants to conduct an independent business review. Their report concluded that the business was not viable and that it ought to be placed into a formal insolvency proceeding.

We were subsequently introduced to the business in late 2005 by its external auditors to provide a second opinion. We concluded that the contractual nature of the concessions were such that they would cease on insolvency and the design side would be irreparably damaged as it would lose panel status with its customers. Ultimately, £300,000 of creditor liabilities would have been written off. This course of action would also have led to the Bank calling in personal guarantees of £100,000 from the directors.

We identified a solution for the business which would enable it to trade on without endangering the business or provoking recovery actions by its creditors.

Part of the solution was to secure standstill agreements and extended payment plans with all key creditors including H M Revenue & Customs. The arrangements were supported by the preparation of detailed of profit and loss and cashflow forecasts which proved that the plan was achievable.

We further assisted in the following areas:

Reviewing monthly management accounts;
Reporting formally to creditors on a quarterly basis;
Preparing rolling forecasts to monitor trading;
Advising strategically on the separation of the business into two operating entities; and
Attending board meetings and reporting to the bankers.

The business has performed well and met its financial commitments and we remain an integral aid to management.

The business has grown significantly and its future prospects are extremely promising. We have no doubt that without our assistance, the business would have collapsed with the loss of more than 50 jobs and no return to creditors.

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